How to use pay-per-click advertising

A step-by-step guide to using pay-per-click (PPC) advertising such as Google AdWords

by The Startups Team

Updated: Oct 3, 2013 Published: Aug 16, 2011

What is Pay-per-click?

Pay-per-click advertising, or PPC, is an instant form of marketing, based primarily on internet search engines such as Google.

When you enter a search phrase into a search engine, you are taken to a page with two distinct sets of results. Down the centre of the page run the organic results; these are ranked solely on merit, with no advertising attached. Just above the organic results, and down the side of the page, you will see the sponsored results – these are commercial messages, bought by advertisers on a pay-per-click basis.

The sponsored results are extremely simple, comprising nothing more than a heading, brief description and URL. However they are often highly effective; because a pay-per-click ad is linked to a particular search term, it will only appear when the user types in that term, so it is restricted to a highly targeted audience.

Google is without doubt the most famous name in pay-per-click advertising. Recent research suggests that its PPC platform, AdWords, attracts over 90% of overall spend in this channel in the UK. The bulk of the remaining 8% is taken up by the platforms run by Microsoft and Yahoo!

How does it work?

PPC is, fundamentally, based on an auction. You bid on the keyword(s) you want your ad to appear against – so if, for example, you run a budget flights business and want to appear top of the search rankings, you might bid on terms such as ‘cheap flights,’ ‘budget flights’ or ‘low-cost flights’, telling the search engine company how much you are prepared to spend in total, and how much you are prepared to pay for each click your ad receives.

The search engine will then decide on your ranking, taking into account the size of your bid. The more money you bid, the more chance you have of appearing high up the rankings. But it’s not quite as simple as that. The search engine will also factor in the quality, and relevance of your ad. If you bid a fortune, but your ad offers nothing to the site’s average user, you’ll struggle to get a high ranking.

How much does PPC cost?

Many of the smaller PPC providers require a fixed minimum monthly deposit, but the major search engines differ. Yahoo! gives its users complete freedom to set their minimum monthly deposit and minimum bid; Google does impose minimum bids and deposits, but these vary significantly according to the currency you use and the location of your billing address.

Matt Whelan, director of digital marketing agency Guava, says: “Typically, the cost varies by sector. It can be pennies if you have a low-value product – it might be 10p if you’re selling products that are only £10. But for high-value products like mortgages or car insurance, you have to be up there ready to pay up to £20 a click.”

If you do wish to go for a high-value search term, it’s vital that you think carefully about whether this is going to be worthwhile. If you’re paying £20 per click and your ad generates a 5% conversion rate, you’ll have to spend £400 to make one sale – which may not be financially viable. As PPC operates on an auction model, it’s all too easy to get sucked into a bidding war, and end up paying way over the odds for your keyword.

What advantages does PPC offer over other advertising models?

As a start-up entrepreneur, you’re likely to have a limited marketing budget and a modest brand reach. PPC is well-suited to these circumstances; there’s no barrier to entry, and any company can utilise it. You can bid as much or as little as you like, so if you only have £50 to spend and are happy with a modest ranking, or a less popular keyword, you can get your advert out there without breaking the bank.

Mark Rushworth, an SEO specialist who heads up the digital team at Bite Digital, says “the immediacy” of pay-per-click is another advantage, adding that the model is “phenomenally quick. We specialise in organic search and there’s no competition – if you want to make money for the first three or four months you’ve got to go PPC.”

What type of small business is PPC suitable for?

For small firms which don’t do much business on the internet, or lack an effective web presence, PPC may be a waste of time. However, a presence near the top of the search engine rankings can provide real commercial gain for companies in a range of sectors.

According to Mark Rushworth, PPC is “much easier for retail but tradespeople can benefit because they tend to be geographically limited so they can maximise on it. You can also bid to be first on Google Places, which follows a similar model to PPC – on Google Places, there’s only one spot you can buy.”

What sort of click-through rates can I expect from my ad?

This will completely depend on the quality of your ad. Mark Rushworth says that, on some accounts, his clients are seeing click-through of 40-45%, even on limited spend. However, this won’t be the case for everyone: only those who optimise their campaign and think clearly about their objectives have a chance of such a good return.

How do I set up a PPC account?

It depends on which site you’re using. However, for Google, the process is extremely simple. You have to set up a Google account, go to the AdWords page and set up a campaign. Then you can set your total budget, set the amount you wish to pay per click, and bid for the keywords you wish to advertise against.

How do I ensure a high ranking?

First of all, you must make sure you do your research before selecting your keywords. Find out what people are searching for, and be prepared to tweak your key messages to suit the search terms.

It’s also vital that you look at less obvious keywords. A mainstream search term may attract more users than a more obscure one; however, if you’ve only got a limited budget, you’ve got more chance of securing a high ranking with a less popular term. And, because the less common terms are cheaper, you can target more of them.

It’s also important to completely tailor your ad to the results you wish to appear against. The more relevant your ad is, and the more it can help the reader, the more likely it is to rank highly. Make sure the keywords in your ad match the keywords which are appearing in your organic ranking, and that your website does exactly what your ad says it will – otherwise Google will punish you.

How do I ensure my ad delivers revenue?

With PPC, clarity is key. You have to think about the context in which people view your ad, and signpost your service with simple, compelling language.

According to Mark Rushworth, “it’s ultimately about your ad being more emotive than the others – if you’re cheaper, put a physical price in the ad. You’re pandering to the searcher’s need, so you’ve got to think what they are looking to find out. You’ve got to turn the process on its head. If they’re interested in guarantees, price, free delivery, you’ve got to factor these in.”

Matt Whelan adds: “The best thing a company can do is to look at its website first and assess what will complement the PPC. You need to have a good conversion rate, a good landing page, a low bounce rate. It doesn’t matter how good the agency is, how well optimised the ad is, it won’t work with a bad website.”